2024 Full Year Results

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE TO DO THE SAME WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION.

30 April 2025

Videndum plc

2024 Full Year Results

"Results In Line, Covenants Reset"

Financial summary

- 2024 result was in line with the 16 December 2024 Trading Update guidance.

- Revenue 8% lower than 2023 against a challenging macroeconomic backdrop.

- Adjusted operating loss* of £18.2 million. Before £18.3 million of H2 one-off charges, the result was break-even.

- Statutory operating loss before tax of £96.5 million includes a £51.3 million asset impairment charge, £12.0 million of losses of previously discontinued operations, and £11.3 million of restructuring costs.

- Adjusted operating cash flow up 45% to £16.8 million (2023: £11.6 million).

- Free cash flow £28.3 million higher at £4.5 million inflow.

- Net debt* at 31 December 2024 was £133.0 million (2023: £128.5 million) representing leverage of 5.2x (2023: 3.3x). December 2024 covenant leverage and interest cover tests met.

- RCF covenants successfully reset in April 2025 through to the end of the facility in August 2026.

- Refinancing of the RCF launched April 2025 and expected to be completed pre H1 FY 25 results in September.

- Gross equity of £8m will be raised on 30 April 2025, which the Company will announce separately today, adding to liquidity headroom.

- Financial statements prepared on a going concern basis with material uncertainty, consistent with the approach taken for H1 2024 and FY 2023 results.

Key achievements

- Restructuring initiatives expected to deliver annualised cost savings of £18 million with a £15 million benefit in 2025.

- Discretionary spending curtailed across the Group from Q4.

- Pricing discipline and discounting controls put in place.

- New product development programmes reinvigorated with major product launches scheduled for 2025.

- Successful delivery of the Summer 2024 Olympic Games contract worth £8 million.

- Amimon sold in April 2025 for gross cash consideration of £2.6 million, with the additional benefit of avoiding operational and restructuring cash out flows that would have otherwise been required.

Commenting, Stephen Harris, Executive Chairman, said:

"While 2025 had a soft start, conditions have been improving month by month. We anticipate that H1 2025 revenue will decline compared to H1 2024 as we lap the Q1 2024 spike in the Cine and Scripted TV market post-strike, along with deep discounting that pulled sales forward from H2 2024. H2 2025 is expected to be stronger due to the normalisation of content creation markets and reductions in channel overstocking created in 2024, with FY 2025 revenues flat compared to 2024.

"The issue of tariffs is fast moving and has potential ramifications across some 50% of the business. Our approach is to carefully monitor the developments in this area, and Videndum will rely on its strong position in the markets in which it operates to implement price increases as necessary to pass on the additional cost of tariffs. The Group should enjoy an advantage relative to the vast majority of its competition, which are Chinese. However, the main 2nd order risk we see is a global recession that would impact demand for our products.

"Adjusted operating profit margins* are expected to improve to low-single-digit levels, benefiting from the extensive restructuring activities announced so far, most of which are now complete, and which will have a more pronounced impact in the second half of 2025.

"In 2026 and beyond, revenues will benefit from both a return to market growth and a resumption of new product introductions. Longer-term expectations for the business are to achieve mid-double-digit adjusted operating profit margins* from a combination of operating leverage on revenue growth, structural simplification and continued focus on operational efficiencies.

"With our premium products, market-leading brands and improving cost base, the Board is confident that the Group is well positioned for the future."

Notes

This announcement contains inside information. The person responsible for arranging the release of this announcement on behalf of Videndum plc is Jon Bolton, Group Company Secretary.

* In addition to statutory reporting, Videndum plc reports alternative performance measures from continuing operations ("APMs") which are not defined or specified under the requirements of International Financial Reporting Standards ("IFRS"). The Group uses these APMs to aid the comparability of information between reporting periods and Divisions, by adjusting for certain items which impact upon IFRS measures and excluding discontinued operations, to aid the user in understanding the activity taking place across the Group's businesses. APMs are used by the Directors and management for performance analysis, planning, reporting and incentive purposes. A summary of APMs used and their closest equivalent statutory measures is given in the Glossary.

An audio webcast and Q&A for Analysts and Investors will be held today, starting at 09:00am UK time. The presentation slides are available on our website.

Users can pre-register to access the webcast and slides using the following link:

https://videndum.com/investors/results-reports-and-presentations/

Notes to Editors:

Videndum is a leading global provider of premium branded hardware products and software solutions to the content creation market. We are organised in three Divisions: Videndum Media Solutions, Videndum Production Solutions and Videndum Creative Solutions.

Videndum's customers include broadcasters, film studios, production and rental companies, photographers, independent content creators ("ICC"), professional musicians and enterprises. Our product portfolio includes camera supports, video transmission systems and monitors, live streaming solutions, smartphone accessories, robotic camera systems, prompters, LED lighting, mobile power, carrying solutions, backgrounds, audio capture, and noise reduction equipment.

We employ around 1,500 people across the world in ten different countries. Videndum plc is listed on the London Stock Exchange, ticker: VID.

More information can be found at: https://videndum.com/

LEI number: 2138007H5DQ4X8YOCF14

2024 financial overview

Income and expense

The numbers below are presented on a continuing basis (unless otherwise stated). In 2023 three operations were reported as discontinued: Lightstream and Syrp, which were sold and closed down respectively; and Amimon, which was held for sale in 2023 but for 2024 is included in continuing operations and was sold in April 2025.

*For the Group, before adjusting operating items of £78.3 million (2023: £18.0 million), adjusting interest items of £0.1m (2023: £2.6 million) and operating loss from discontinued operations of £nil (2023: £60.9 million loss). ** Revenue includes revenue from Amimon of £2.9 million (2023: £nil)

Revenue declined by 8% on a reported basis (including the effects of FX and Amimon restated as a continuing operation). Declining demand across our three core markets of ICC, Cine and Scripted TV, and Broadcast drove a 5% decrease in revenue on a constant currency basis.

Demand in the Cine and Scripted TV market started the year strongly (albeit not at pre-strike levels) as paused productions from 2023 were completed. Thereafter, demand declined, and recovery is now expected to materialise in Q2/Q3 2025.

The Broadcast market declined year-on-year other than the uplift in revenue from the Paris Summer Olympics. The decline was a result of news budgets being redirected to war-coverage or cut significantly. In H2 the demand uptick from the US Presidential election was much less pronounced than anticipated.

The ICC segment was sluggish throughout the year, impacted by macroeconomic factors including high interest rates, inflation and weak consumer confidence. This led to a decline in revenue, particularly in H2 2024 after a drive to secure more revenue in H1 2024 through discounting was reversed in H2 through better price discipline.

Adjusted gross profit margin* fell from 38.5% in 2023 to 32.9% in 2024 with most of the fall attributable to £12.9 million of H2 one-off inventory provision charges and £0.2 million fixed asset write-off, following management review of inventory levels compared to future demand expectations.

Adjusted operating expenses* increased by £6.9 million to £112.4 million (2023: £105.5 million) including £4.8 million from extra write-off of intangible assets that arose from past capitalised internal development spend and software purchases. Similar to the additional inventory provision, this resulted from scrutiny of intangible asset carrying balances compared to expectations of future sales. Excluding these items, adjusted operating expenses* were £107.6 million, broadly flat compared to 2023 (£105.5 million) and 15% lower than in 2022 (£127.2 million).

An adjusted operating loss* of £18.2 million included £13.1 million of extra H2 charges within cost of sales and £5.2 million within operating expenses. Excluding these items, adjusting operating profit* was £0.1 million

We have moved at pace with our operational improvement programme, progressing well with both operating model enhancements and cost saving initiatives. As part of our drive to expand gross margins and reduce inventories we have strengthened our approach to procurement and supply chain management and are rationalising SKUs. Pricing discipline has been reinstated. We are also consolidating manufacturing operations to get greater utilisation, reduce capital expenditure and improve operating efficiencies. A significant part of this consolidation is the closure of our manufacturing operations in Bury St Edmunds, UK, moving these to our existing sites in Feltre, Italy and Cartago, Costa Rica.

We are simplifying the Company structure in 2025 by moving from three Divisions to two, eliminating duplicated overheads and operations, and dramatically constraining discretionary spending. We expect this structural change to be complete by the beginning of 2026.

The cost savings that result from these initiatives started in 2024 but had little impact in the year. At full run-rate they will achieve an annualised saving of c.£18 million, of which c.£15 million will be achieved in 2025. The cash cost of the restructuring is expected to be c.£15 million with £3 million spent in 2024 and the remainder to be incurred in 2025.

Adjusted net finance expense* of £6.8 million was £4.7 million lower than in 2023 (£11.5 million). This was the result of lower borrowings, following the equity raise at the end of 2023 and despite higher interest rates on borrowings. In 2024, an average of c.55% of our borrowings was fixed through swaps at an average rate of c.5% (including margin). These swaps matured in September 2024 ($40.0 million) and January 2025 (£37.0 million). Our floating debt currently has an average interest rate of c.9% (including margin). Net finance expense also includes interest on lease liabilities, income from the accounting surplus of the defined benefit pension scheme, amortisation of loan fees, and net currency translation gains or losses.

Adjusted loss before tax* was £25.0 million compared to a £1.8 million profit in 2023.

Statutory loss before tax from continuing and discontinued operations of £103.4 million (2023: £79.7 million loss) includes adjusting items from continuing operations of £78.3 million (2023: £20.6 million) and a £nil loss from discontinued operations after adjusting items (2023: £60.9 million loss). The adjusting items from continuing operations primarily relate to the impairment of assets (£51.3 million), losses of previously discontinued operations (£12.0 million), and restructuring costs (£11.3 million) - see "Adjusting items" section for further detail.

The Group's effective tax rate ("ETR") was a 32% credit on the £25.0 million adjusted loss before tax* (2023: 161% on £1.8 million profit before tax*). Statutory ETR from continuing and discontinued operations was a 42% debit on £103.4 million loss (2023: 3% credit on £79.7 million loss before tax) reflecting the write-off of the majority of deferred tax assets previously held.

Adjusted basic loss per share* was 17.9 pence (2023: 9.5 pence earnings per share). Statutory basic loss per share from continuing and discontinued operations was 155.8 pence (2023: 157.5 pence loss per share).

Cash flow and net debt

Cash generated from operating activities was £22.5 million (2023: £9.8 million) and net cash from operating activities was £12.7 million (2023: £16.1 million outflow).

Free cash flow* at £4.5 million was a £28.3 million improvement over 2023, reflecting stronger adjusted operating cash flow* combined with lower interest and restructuring spend. Adjusted operating cash flow* at £16.8 million was £5.2 million higher than in 2023 as working capital inflows offset higher operating losses.

(1) Includes depreciation, and amortisation/impairment of purchased software and capitalised development costs

(2) Purchase of Property, Plant & Equipment ("PP&E") and capitalisation of software and development costs

(3) Includes share-based payments charge (excluding retention) and other reconciling items to adjusted operating cash flow*

Net cash from operating activities of £12.7 million (2023: -£16.1 million outflow) comprises £4.5 million free cash flow from continuing operations* (2023: -£23.8 million outflow) plus £15.4 million capital expenditure from continuing operations (2023: £15.3 million), less £2.7 million from sale of PP&E and software from continuing operations (2023: £0.3 million), less £0.2 million interest received from continuing operations reported within net cash used in investing activities (2023: £nil), plus net cash from operating activities from previously discontinued operations of -£4.3 million (2023: -£7.3 million outflow)

Adjusted trade working capital* decreased by £21.3 million in 2024 (2023: £1.1 million increase); £12.9 million due to the H2 one-off inventory provision, and £8.4 million from timing of trade receivables collections and trade payables. Inventory decreased by £0.1 million in 2024 excluding the additional H2 inventory provision. Trade receivables decreased by £7.2 million and trade payables increased by £1.1 million.

Capital expenditure of £15.4 million (2023: £15.3 million) included:

Interest and tax paid decreased by £16.1 million compared to 2023, due to the timing of tax payments and refunds (£11.1 million lower), in addition to £5.2 million lower interest costs following lower average borrowings throughout the year.

Earnout and retention bonuses relate to AUDIX, Savage and Quasar. The sale of a property in the Production Solutions Division yielded £2.5 million and restructuring and integration costs totalled £3.7 million.

Net debt* at 31 December 2024 of £133.0 million was £4.5 million higher than at 31 December 2023 (£128.5 million). Net lease additions of £3.9 million include the addition of a £1.8 million lease liability for a new Production Solutions Division property following the sale of the existing site, and £0.9 million in relation to Amimon which returned to continuing operations. The £0.8 million unfavourable impact from FX arose primarily from the translation of our US dollar debt, following the strengthening of the US dollar against Sterling across 2024.

At 31 December 2024, leverage1 was 5.2x (31 December 2023: 3.3x) and interest cover2 was 1.4x (31 December 2023: 2.0x).

Liquidity at 31 December 2024 totalled £47.6 million, comprising £34.7 million unutilised RCF (total facility of £150 million which matures in August 2026) and net cash of £12.9 million. Gross cash of £57.3 million is stated before a £44.4 million overdraft due to operational cash pooling arrangements.

Notwithstanding the headroom over the covenants linked to trading in the base case, the Group must, in all scenarios, complete its planned refinancing or satisfy lenders with an alternative deleveraging plan by October 2025, in order to avoid triggering an event of default. The Board is confident based on preparations and progress to date that either a refinancing will be completed or a satisfactory de-leveraging plan will be agreed.

Borrowing facilities and financial position at 31 December 2024 and at April 2025

The group has a committed £150 million Multicurrency Revolving Credit Facility ("RCF") with a syndicate of lenders and a term until 14 August 2026 (see note 4.1 "Net Debt"). Previously the RCF had been committed at £200 million with maturity at 14 February 2026, but in the second quarter of 2024, a six-month extension was negotiated for a £50 million reduction in commitment and improved lending covenants.

Whilst June 2024 and September 2024 covenant thresholds were met, the slower pace of recovery in the second half of 2024 led to the request for an amendment to the December 2024 covenants. This was granted on 13 December 2024 with leverage raised to less than 5.5x (originally 3.0x). Certain additional conditions were placed on the Group during this process including the introduction of a new February 2025 covenant and the requirement for lender consent to increase drawn RCF above £129 million.

Subsequent to the end of 2024 the amended December covenant tests were met and both the February 2025 and March 2025 covenant tests waived. The Group has successfully negotiated amended covenants ("the Amended Covenants") through to the end of the facility in August 2026. Leverage and interest cover will be tested only for December 2025, March 2026 and June 2026 with, at each test date, leverage (net debt:EBITDA) to be no higher than 6x and interest cover (EBITA:net interest) of at least 1x.

A trailing last twelve month ("LTM") EBITDA covenant will apply for two quarters with LTM EBITDA to be at least £5 million at the end of June 2025 and at least £6 million at the end of September 2025. In addition, throughout the remaining term of the RCF, a weekly tested minimum liquidity covenant will be put in place, starting at £7.5 million, before falling to £5 million from 1 September 2025. Minimum liquidity has been defined as cash at bank, net of overdrafts, plus available undrawn RCF up to the cap at which lender consent is required. This cap has been raised from the £129 million introduced through the December 2024 amendment process, to £139 million for the remaining term of the RCF. The Amended Covenants are conditional on the Company raising at least £6 million in net proceeds from a fully underwritten placing of new ordinary shares, which was announced separately today. Shareholders are encouraged to read that announcement alongside this FY24 results announcement.

The Group is actively seeking to fully or partially refinance its RCF, most likely by accessing private credit funds, before its first half 2025 results are announced at the end of September. The intention is to secure funding that stabilises the Group's borrowing position and ensures sufficient long-term liquidity to enable the business to execute its strategy and return to growth. As part of the Amended Covenants, existing RCF lenders have a right to exert more influence over the Group, including in the extreme, triggering an event of default, should the Group fail to complete the refinancing or agree an alternative deleveraging plan with lenders by October 2025. These and previous amendments to the RCF preclude the Board from declaring a dividend and restrict factoring to £15 million. Costs incurred to date in 2025 in preparation for the planned refinancing, in addition to costs to restructure the RCF, total £5.4 million.

Going concern - material uncertainty

The Group's financial statements have been prepared on a going concern basis. The Board has considered the future trading and cash flow forecasts over a period of 12 months from the approval date of the financial statements and believes that available liquidity will be sufficient to enable the Group to meet its liabilities as they fall due. Furthermore, the Board believes that the Amended Covenants will be met and that the business will successfully refinance prior to the end of September 2025.

The Board has conducted a thorough evaluation of the going concern assumption and has modelled both a base case and a severe but plausible downside scenario that reflects a prolonged period of weak demand. Notwithstanding the planned refinance, both financial projections reflect current borrowings and related terms, the Amended Covenants and net proceeds from the share placing.

Whilst there is headroom over the covenants linked to trading in the base case, the Group must, in all scenarios, complete its planned refinancing or satisfy lenders with an alternative deleveraging plan by October 2025, in order to avoid triggering an event of default. The Board is confident based on preparations and progress to date that either a refinance will be completed or a satisfactory deleveraging plan will be agreed.

As a result of the financial projections, under the severe but plausible scenario, multiple breaches of the Group's covenants are forecast within 12 months from the approval of these financial statements. Furthermore, without additional sources of funding or new measures to improve the liquidity situation the business would have insufficient liquidity to operate from the first quarter of 2026.

If a covenant breach occurred, or additional liquidity beyond the liquidity cap be required, the Group would enter into negotiation with lenders as it has done in the past. However, as would be the case in any liquidity or covenant amendment request, funding to the Group could be withdrawn and additional liquidity or covenant relief not granted.

Should the severe but plausible scenario come to pass, and absent additional management mitigation actions, it could jeopardise the ability for the Group to successfully complete its planned refinancing prior to the end of September 2025. This could potentially mean the lenders exercising their right to default the RCF in October 2025 if a satisfactory agreement could not be reached to deleverage the Group. 

In April 2025 a series of significant, additional tariffs to be applied to goods entering the United States were announced. A number of countries applied retaliatory tariff increases on the US who subsequently suspended application of some of the additional tariffs. The Group sells its market-leading products throughout the world, including in the US, with components sourced from around the world, including from China. It also has US based manufacturing and assembly plants that serve countries outside of the United States and faces competition from Chinese origin products. Given the uncertain nature of the situation and not least the potential for a negative impact on the world economy from globally higher tariffs, the financial projections have not been adjusted for the latest tariff developments. Nevertheless, it is recognised by the Board that both risk and opportunity exist. 

The Board has concluded that these financial projections together with the risk of a negative tariff-related outcome and the inherent difficulty in predicting the terms and timing of a refinance, or deleveraging plan should a refinance not occur, do indicate the existence of a material uncertainty which may cast significant doubt over the Group's ability to continue as going concern. The financial statements do not include the adjustments that would result if the Group were unable to continue as a going concern.

The results for the full year 2023 and half year 2024 also indicated the existence of a material uncertainty.

Adjusting items from continuing operations

Adjusting items from continuing operations in 2024 primarily relate to an impairment of assets charge of £51.3 million, losses of previously discontinued operations of £12.0 million, and restructuring and other costs of £11.3 million.

The impairment of assets mainly reflects a £31.1 million impairment of goodwill within the Production Solutions Division (2023: £nil), a £14.9 million impairment of goodwill within the Media Solutions Division (2023: £nil), and a £4.6 million impairment of land and buildings (2023: £1.5 million). Trading conditions have been challenging for the last two years and, given the revised outlook on future demand, there was a resulting impairment of some of the goodwill accumulated from historic acquisitions.

The £12.0 million loss of previously discontinued operations reflects both the operational loss in the year and a £5.9 million impairment of assets. Amimon accounted for £11.5 million of this loss.

Restructuring and other costs reflect Group-wide restructuring projects commissioned in 2024, which resulted in a number of employees leaving in 2024, for which costs were recognised in 2024. Future employee-related costs were recognised where an announcement of restructuring activity in 2025 was made prior to the end of 2024. Further detail on restructuring can be found in note 2.2.

Discontinued operations

The Group is focusing more tightly on high-end professional content creation, where it has high market share, sales channel expertise and more compelling growth opportunities. Consequently, in 2023 the Board decided to exit loss-making operations in non-core markets, specifically medical and gaming, to concentrate R&D investment on the content creation market. As a result, whilst the Creative Solutions Division as a whole remains core going forward, Amimon was held for sale at 31 December 2023 and Lightstream was sold on 2 October 2023. Both were reported as discontinued operations in 2023. In addition, Syrp (the Media Solutions' motion controls R&D centre in New Zealand) was wound down in H2 2023, which is also reported within discontinued operations. With no sale taking place in 2024, Amimon was reclassified to continuing operations and accordingly there were no discontinued operations in 2024.

Post year end, the Amimon business was sold in April 2025 together with a licence to use Teradek related intellectual property for products that do not compete with those of Videndum. In 2025, for the period up until disposal, Amimon will be treated as a discontinued operation. The Board will consider further potential disposals, as appropriate.

Notes

Divisions

Videndum's purpose is to "enable our customers to capture and share exceptional content", and this is what guides us. We focus on the professional end of the content creation market, operating in defensible niches where our premium brands have strong share.

There is growing appetite for high quality content, and we expect demand for, and investment in, original content to remain positive (e.g. live news, broadcast sport, reality and scripted TV shows, films, digital visual content for e-commerce etc).

The Group is well positioned at the heart of this market and our strategic priorities remain unchanged. However, we are focusing more tightly on our core markets where we have market-leading product offerings in addition to a focus on driving operational efficiency. Our long-term strategy is to invest in areas where we can grow organically, while improving our margins.

Media Solutions

The Media Solutions Division designs, manufactures and distributes premium branded equipment for photographic and video cameras, and smartphones. It provides dedicated solutions to professional and amateur photographers and videographers, independent content creators, vloggers/influencers, enterprises, governments and professional musicians. These include camera supports (tripods and heads), smartphone and vlogging accessories, lighting supports and controls, LED lights, audio capture and noise reduction equipment, carrying solutions and backgrounds. Media Solutions represents c.50% of Group revenue.

* For Media Solutions, before adjusting items of £26.9 million (2023: £12.8 million) and operating loss from discontinued operations of £nil (2023: £3.4 million loss)

Market conditions continued to be tough for Media Solutions, with demand in the consumer and ICC segments declining, albeit at a lower rate than that seen in 2023.

Cassa Integrazione Guadagni Ordinaria ("CIGO") continued to be applied at the Feltre factory, which allowed us to flex manufacturing output to prevent excess inventory being built. The Division also benefited from the 2023 restructuring actions.

Excluding an H2 2024 one-off stock provision charge of £7.4 million and £2.7 million write-off of previously capitalised development spend and fixed assets, adjusted operating profit margin* was 2.4% (2023: 7.4%) reflecting adverse operating leverage on the 14% revenue decline.

Statutory operating loss was £33.8 million (2023: £4.8 million loss) which reflects £26.9 million of adjusting items from continuing operations (2023: £12.8 million) and a £nil million from discontinued operations (2023: £3.4 million loss).

Production Solutions

The Production Solutions Division designs, manufactures and distributes premium branded and technically advanced products and solutions for broadcasters, film and video production companies, independent content creators and enterprises. Products include video fluid heads, tripods, LED lighting, batteries, prompters and robotic camera systems. It also supplies premium services including equipment rental and technical solutions. Production Solutions represents c.30% of Group revenue.

* For Production Solutions, before adjusting items of £36.0 million (2023: £3.1 million).

Production Solutions' revenue was 10% lower than in 2023 despite the successful delivery of the Olympics contract for the Paris Summer Games. Conditions remained challenging across all end markets including the Cine and Scripted TV segment which itself fell significantly, now representing c.15% of divisional sales. Launches of the Vinten Versine 360 fluid head and Litepanels Astra IP have both been well received, with advance orders placed for fulfilment in 2025.

Excluding an H2 2024 one-off stock provision charge of £4.6 million and £0.7 million write-off of previously capitalised development spend, the adjusted operating profit margin* was down to 7.6% (2023: 12.5%) reflecting adverse operating leverage on the 10% revenue decline.

Statutory operating loss was £34.4 million (2023: £9.5 million profit) after £36.0 million of adjusting items (2023: £3.1 million).

Creative Solutions

The Creative Solutions Division develops, manufactures and distributes premium branded products and solutions for film and video production companies, independent content creators, enterprises and broadcasters. Products include wired and wireless video transmission systems, lens control systems, monitors and camera accessories for the Cine and Scripted TV and live production segments. Creative Solutions represents c.20% of Group revenue.

* For Creative Solutions, before adjusting items from continuing operations of £11.8 million (2023: £1.7 million) and operating loss from discontinued operations of £nil (2023: £57.1 million loss) ** Revenue includes revenue from Amimon of £2.9 million (2023: £nil)

The strikes had the largest effect on Creative Solutions in 2023, where the majority of products are used in Cine and Scripted TV. Accordingly, revenue up 16% was against a depressed base in 2023. Demand in the Cine and Scripted TV market started the year strongly (albeit not at pre-strike levels) as paused productions from 2023 resumed. However, thereafter demand declined as these productions were finished off. Resumption in demand growth is now expected in Q2/Q3 2025.

Excluding an H2 2024 one-off stock provision charge of £0.9 million and £1.6 million write-off of previously capitalised development spend and software purchases, the adjusted operating profit margin* was up to 5.0% (2023: 1.5%) reflecting positive operating leverage on the 16% higher revenue.

Statutory operating loss was £11.3 million (2023: £58.0 million loss), including £11.8m of adjusting items from continuing operations (2023: £1.7 million) and a £nil million loss from discontinued operations (2023: £57.1 million loss).

Corporate costs

Corporate costs include charges relating to the Long Term Incentive Plan ("LTIP") and Restricted Share Plan ("RSP") used to incentivise and retain employees across the Group. They also include payroll and bonus costs for the Executive Directors and the head office team, professional fees, property costs, and travel costs.

* For corporate costs, before adjusting items of £3.6 million (2023: £0.4 million).

Corporate costs were higher than those in 2023 largely due to the non-repeat of the £1.4 million reversal of certain LTIP charges in 2023. £3.6 million of adjusting items (2023: £0.4 million) primarily reflects restructuring actions taken in H2 2024.

Dividend

The Board recognises the importance of dividends to the Group's shareholders and intends to resume payment of a progressive and sustainable dividend when appropriate to do so. The existing terms under the RCF preclude the Board from declaring a dividend.

Market conditions

The macroeconomic environment affecting the consumer and ICC segments is expected to see a return to mid-single digit growth; as underlying demand for photographic services remains stable, and replacement, upgrade and attachment rate patterns return to more normal levels.

The Cine and Scripted TV market is healthy, and demand is set to increase steadily through both underlying activity and replacement cycles. However, the market will take a number of years to recover to the highs of 2022.

The Broadcast TV segment is set to stabilise after a period of industry headwinds. The volume of non-scripted content is expected to remain broadly stable with decline in news offset by growth in sports coverage.

Outlook

While 2025 had a soft start, conditions have been improving month by month. We anticipate that H1 2025 revenue will decline compared to H1 2024 as we lap the Q1 2024 spike in the Cine and Scripted TV market post-strike, along with deep discounting that pulled sales forward from H2 2024. H2 2025 is expected to be stronger due to the normalisation of content creation markets and reductions in channel overstocking created in 2024, with FY 2025 revenues flat compared to 2024.

Adjusted operating profit margins* are expected to improve to low-single-digit levels, benefiting from the extensive restructuring activities announced so far, most of which are now complete and which will have a more pronounced impact in the second half of 2025.

In 2026 and beyond, revenues will benefit from both a return to market growth and a resumption of new product introductions. Longer-term expectations for the business are to achieve mid-double-digit adjusted operating profit margins* from a combination of operating leverage on revenue growth, structural simplification and continued focus on operational efficiencies.

With our premium products, market-leading brands and improving cost base, the Board is confident that the Group is well positioned for the future.

Risks and Uncertainties

Videndum is exposed to a number of risk factors which may affect its performance. The Group has an established framework and assesses these risks on a regular basis and has put in place appropriate processes and procedures to mitigate against them. However, no system of control or mitigation can completely eliminate all the risks the business faces. 

The principal risks and uncertainties that may affect our performance are set out in the 2024 Annual Report and are summarised in the table below. The issue of tariffs is fast moving and recent but has ramifications in different risk areas, and is reflected where applicable (including demand for products, cost pressure, supply chain dependency). Our approach is to carefully monitor the developments in this area, and Videndum will rely on its strong position in the markets in which it operates to implement price increases as necessary to pass on the additional cost of tariffs. The Group may be at an advantage relative to its competitors, the vast majority of which are Chinese. However, there is a risk that a prolonged tariff war increases the risk of a global recession impacting demand.

Responsibility

ESG Strategy

Videndum's ESG programme is focused on the following:

Environment: Reduce carbon emissions; Reduce packaging and waste; Embed sustainability into our product life cycle

Our people: Continue to prioritise health and safety; Improve diversity and inclusion

Responsible practices: Formalise the integrity of our entire supply chain

Giving back: Positively impact the communities in which we operate

Our priorities in 2024 included further developing energy and emission reduction initiatives, reducing plastic and packaging, and training our employees on the right behaviours and culture within our business.

Governance

The Videndum Board provides oversight and has overall responsibility for the Group's ESG programme. An ESG Committee comprising senior executives from across the Group, drives ESG and climate-related performance. ESG and Climate Governance has been integrated into our existing processes. We annually report on the progress of our ESG Strategy in our Annual Report. We have a Code of Conduct which outlines the values and behaviours we expect from our employees, as well as what you can expect from Videndum and our people.

Environment

Videndum continues to embed environmentally responsible practices across our sites. Although our operations have a limited impact on the environment, we nonetheless recognise our responsibility to appropriately identify, assess and manage environmental impacts.

Climate change

We recognise our duty to work towards mitigating climate change. Following the Task Force on Climate-related Financial Disclosures ("TCFD") recommendations, we understand that climate change presents two categories of risks: transition and physical. As a result, climate risks can come in the form of increasing laws, regulations, markets, and technology, which could result in a financial loss or reputational damage for the business. The Group recognises climate change's global risks and impacts and acknowledges its responsibility to contribute to mitigation efforts. We conduct annual climate scenario analyses for our main sites, key suppliers, and supply routes, modelling the effects of climate change across three different warming scenarios. We review the effectiveness of mitigation measures for each risk with various stakeholders within the business. Our Head of Group Risk Assurance annually reviews climate-risk exposure against business risk level tolerances.

Emissions reduction

We reduced Scope 1 and 2 (market-based) emissions in 2024 by 18% and remain focused on achieving net zero by 2035.

Board and governance

2024 saw significant change for the Board. Having become Chairman on 1 May 2024, succeeding Ian McHoul, Stephen Harris became Executive Chairman on 25 October 2024 following the departure of Stephen Bird as Chief Executive Officer. Given the deteriorating situation facing the business, the Board felt that this change was essential for the long-term best interests of Videndum. We have commenced a search for a new permanent Chief Executive. Whilst this search is ongoing, Stephen Harris shall lead the Company in an executive capacity. Whilst the UK Corporate Governance Code says that the roles of Chairman and Chief Executive should not typically be exercised by the same individual, the Board has determined that, given the Company's current situation, significant changes to the leadership of the Company were necessary to navigate the challenges the Company is facing, and that Stephen Harris is best suited to do this for a short period whilst a detailed and thorough search for a new permanent Chief Executive is coordinated by the Board. Accordingly, the Board believes that this remains in the best interests of the Company and its shareholders. The Board nevertheless appreciates the position in the UK Corporate Governance Code, and once we have identified and appointed a new permanent Chief Executive, Stephen Harris will revert to his former role as a non-executive Chairman.

On the same date, Andrea Rigamonti ceased to be Group Chief Financial Officer and Sean Glithero joined the Company as Interim Group Chief Financial Officer.

At the Company's AGM on 19 June 2024, Ian McHoul, Erika Schraner and Tete Soto ceased to be directors of the Company, not seeking re-appointment by shareholders. Polly Williams joined the Board as an independent non-executive director and Chair of the Audit Committee with effect from 1 July 2024.

Following the end of 2024, we have further appointed Eva Lindqvist as an independent non-executive director with effect from 1 April 2025. Caroline Thomson, independent non-executive director and Chair of the Remuneration Committee will not stand for reappointment at the Company's AGM to be held on 16 June 2025. She will cease to be a director of the Company at the close of the AGM. With effect from then, Anna Vikstršm Persson will succeed Caroline as Chair of the Remuneration Committee and Eva Lindqvist will succeed Caroline as the independent non-executive director with responsibility for employee engagement.

The Company's 2025 AGM will be held on Monday 16 June 2025 at Hilton London, Syon Park TW8 8JF. The Notice of Meeting and explanatory notes for the AGM's business will accompany the 2024 Annual Report that will be published in mid-May 2025 and the Board looks forward to the opportunity to meet with shareholders at the AGM.

Forward-looking statements

This announcement contains forward-looking statements with respect to the financial condition, performance, position, strategy, results and plans of the Group based on management's current expectations or beliefs as well as assumptions about future events. These forward-looking statements are not guarantees of future performance. Undue reliance should not be placed on forward-looking statements because, by their very nature, they are subject to known and unknown risks and uncertainties and can be affected by other factors that could cause actual results, and the Group's plans and objectives, to differ materially from those expressed or implied in the forward-looking statements. The Company undertakes no obligation to publicly revise or update any forward-looking statements or adjust them for future events or developments. Nothing in this announcement should be construed as a profit forecast.

The information in this announcement does not constitute an offer to sell or an invitation to buy shares in the Company in any jurisdiction or an invitation or inducement to engage in any other investment activities. The information in this announcement does not constitute an offer to sell or an invitation to buy shares in the Company in any jurisdiction or an invitation or inducement to engage in any other investment activities. No securities in connection with any possible transaction contemplated in this announcement have been or will be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), or under the securities laws of any state or other jurisdiction of the United States, and may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in compliance with the securities laws of any state or any other jurisdiction of the United States. The release or publication of this announcement in certain jurisdictions may be restricted by law. Persons who are not resident in the United Kingdom or who are subject to other jurisdictions should inform themselves of, and observe, any applicable requirements.

This announcement contains brands and products that are protected in accordance with applicable trademark and patent laws by virtue of their registration.

No person has been authorised to give any information or to make any representations other than those contained in this announcement and, if given or made, such information or representations must not be relied on.

Neither the content of the Group's websites (or any other website) nor the content of any website accessible from hyperlinks on the Group's website (or any other website) is incorporated into or forms part of this announcement.

For and on behalf of the Board

Condensed Consolidated Income Statement

For the year ended 31 December 2024

Consolidated Statement of Comprehensive Income/(Loss)

For the year ended 31 December 2024

Condensed Consolidated Balance Sheet

As at 31 December 2024

Consolidated Statement of Changes in Equity

Condensed Consolidated Statement of Cash Flows

For the year ended 31 December 2024

(1) Total cash outflow for leases is £7.6 million (2023: £8.2 million) of which £1.5 million (2023: £1.5 million) relates to interest and £6.1 million (2023: £6.7 million) to principal lease repayments.

For the year ended 31 December 2023, the statement of cash flows of discontinued operations is presented in note 5 "Discontinued operations and non-current assets classified as held for sale".

1. Material accounting policies

Reporting entity

Videndum plc ("the Company") is a public company limited by shares incorporated in the United Kingdom under the Companies Act. The Company is registered in England and Wales and its registered address is William Vinten Building, Easlea Road, Bury St Edmunds, IP32 7BY, United Kingdom. The registered address was changed from Bridge House, Heron Square, Richmond, TW9 1EN on 20 December 2024. The consolidated financial statements of the Company as at and for the year ended 31 December 2024 comprise the Company and its subsidiaries (together referred to as "the Group").

Basis of preparation

The consolidated financial statements of the Group, from which these condensed consolidated financial statements are derived, have been prepared in accordance with UK-adopted international accounting standards as applied in accordance with the provisions of the Companies Act 2006.

The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 December 2024 or 2023 but is derived from those accounts. Statutory accounts for 2023 have been delivered to the Registrar of Companies and those for 2024 will be delivered following the Company's Annual General Meeting. The auditor has reported on those accounts; their reports were unqualified with material uncertainty in relation to going concern and did not draw attention to any matters by way of emphasis and did not contain statements under s.498 (2) or (3) of the Companies Act 2006.

In reporting financial information, the Group presents Alternative Performance Measures ("APMs") which are not defined or specified under the requirements of International Financial Reporting Standards ("IFRS"). The Group believes that these APMs, which are not considered to be a substitute for or superior to IFRS measures, provide stakeholders with additional helpful information and enable an alternative comparison of performance over time. A glossary on note 6 provides a comprehensive list of APMs that the Group uses, including an explanation of how they are calculated, why they are used and how they can be reconciled to a statutory measure where relevant.

Basis of consolidation

Subsidiaries are entities that are controlled by the Group. Control exists when the Group has the rights to variable returns from its involvement with an entity and has the ability to affect those returns through its power over the entity. The results of subsidiaries sold or acquired during the year are included in the consolidated financial statements up to, or from, the date that control exists.

Going concern

Background and context

As outlined in the 2023 Annual Report the financial year ended 31 December 2023 was an exceptionally challenging year for Videndum. This operating environment continued into the first half of 2024 as market conditions remained difficult, albeit with some sign of improvement, with some post-strike recovery in the cine and scripted TV market. Against this backdrop, the business continued to take robust actions, focusing on managing costs tightly, controlling expenditure and working capital in addition to renegotiating its committed RCF (as outlined below).

At the end of first half 2024 there was an expectation of recovery in the second half across all three primary markets of independent content creator, cine and scripted TV and broadcast, but this recovery has been much slower than anticipated. The ICC segment was sluggish throughout the year, impacted by macroeconomic factors including high interest rates, inflation and weakened consumer confidence. Cine revenues grew but were lapping the strike impacted period in the previous year and in the Broadcast market where, other than the uplift in revenue from the Paris Summer Olympics, revenue declined year-on-year through a combination of news budgets being redirected to war-coverage or cut significantly, with the demand uptick from the US Presidential election being much less pronounced than anticipated. 

In the final quarter of 2024 and in response to the weaker macroeconomic environment the business prioritised actions within its control, focusing on an operational efficiency programme to drive performance cost saving. This was focused on four key areas (i) reinstating pricing discipline; (ii) improving operational efficiency; (iii) driving gross margin expansion; and (iv) reducing discretionary spend. A number of restructuring and cost saving actions were announced including headcount reductions associated with reducing divisional management and regional head office structures as well as the relocation of assembly and manufacturing from the UK Bury St Edmonds site to the Feltre site in Northern Italy and Cartago, Costa Rica. A review of procurement, purchasing and supply chain structures also identified savings. Together this led to the business increasing its stated aim of £10 million of cost savings to c.£15 million in 2025 with the annualised impact rising to c.£18 million. After failing to secure a credible offer for the Amimon research operation in Israel during 2024, the business was to be closed in 2025, but subsequently was sold in April 2025, with the intellectual property moved to the US Teradek business. Gross cash proceeds of £2.6 million were realised together with savings from the avoidance of operating and closure costs. Linked to these initiatives, headcount, on a full-time equivalent basis, fell from 1,641 at the end of 2023 to 1,507 at the end of 2024 and, with most of the restructuring activities completing in 2025, is forecast to fall to c.1.380 by the end of 2025, a reduction of 16% over two years.

Borrowing facilities and financial position at 31 December 2024 and at April 2025 

The group has a committed £150 million Multicurrency Revolving Credit Facility ("RCF") with a syndicate of lenders and a term until 14 August 2026 (see note 4.1 "Net Debt"). Previously the RCF had been committed at £200 million with maturity at 14 February 2026, but in the second quarter of 2024, a six-month extension was negotiated for a £50 million reduction in commitment and improved lending covenants.

Whilst June 2024 and September 2024 covenant thresholds were met, the slower pace of recovery in the second half of 2024 led to the request for an amendment to the December 2024 covenants. This was granted on 13 December 2024 with leverage raised to less than 5.5x (originally 3.0x). Certain additional conditions were placed on the Group during this process including the introduction of a new February 2025 covenant and the requirement for lender consent to increase drawn RCF above £129 million.

Subsequent to the end of 2024 the amended December covenant tests were met and both the February 2025 and March 2025 covenant tests waived. The Group has successfully negotiated amended covenants ("the Amended Covenants") through to the end of the facility in August 2026. Leverage and interest cover will be tested only for December 2025, March 2026 and June 2026 with, at each test date, leverage (net debt:EBITDA) to be no higher than 6x and interest cover (EBITA:net interest) of at least 1x.

A trailing last twelve month ("LTM") EBITDA covenant will apply for two quarters with LTM EBITDA to be at least £5 million at the end of June 2025 and at least £6 million at the end of September 2025. In addition, throughout the remaining term of the RCF, a weekly tested minimum liquidity covenant will be place, starting at £7.5 million, before falling to £5 million from 1st September 2025. Minimum liquidity has been defined as cash at bank, net of overdrafts, plus available undrawn RCF up to the cap at which lender consent is required. This cap has been raised from the £129 million introduced through the December amendment process, to £139 million for the remaining term of the RCF. The Amended Covenants are conditional on the Company raising at least £6 million in net proceeds from a fully underwritten placing of new ordinary shares which was announced on 30th April.

The Group is actively seeking to fully or partially refinance its RCF, potentially by accessing private credit funds, before its first half 2025 results are announced at the end of September. The intention is to secure funding that stabilises the Group's borrowing position and ensures sufficient long-term liquidity to enable the business to execute its strategy and return to growth. As part of the Amended Covenants, existing RCF lenders have a right to exert more influence over the Group, including in the extreme, triggering an event of default, should the Group fail to complete the refinancing or agree an alternative deleveraging plan with lenders by October 2025. These and previous amendments to the RCF preclude the Board from declaring a dividend and restrict factoring to £15 million. Costs incurred to date in 2025 in preparation for the planned refinancing, in addition to costs to restructure the RCF, total £5.4 million. 

Trading update for the first quarter of 2025 

Notwithstanding order demand at the start of the calendar year is seasonally lower than in other months of the year, 2025 has had a soft start and was slower than expected. In part this was due to the cine market in the US being impacted by the Los Angeles fires and some further de-stocking in the distribution channels. Order demand, on a constant currency basis for the first quarter was slightly below expectations, at 5% below Budget, albeit strengthening month by month. Due to a higher proportion of orders than normal being received close to the end of the quarter, it was not possible to fulfil and recognise revenue on these orders before the quarter close. Accordingly, the first quarter revenue and operating profit shortfall to Budget was greater than that for orders. 

Going Concern Assessment 

These Financial Statements have been prepared on a going concern basis. The Board has considered the future trading and cash flow forecasts over a period of 12 months from the approval date of these Financial Statements and believes that available liquidity will be sufficient to enable the Group to meet its liabilities as they fall due. Furthermore, the Board believes that the Amended Covenants will be met and that the business will successfully refinance prior to the end of September 2025. 

The Board has conducted a thorough evaluation of the going concern assumption and has modelled both a base case and a severe but plausible downside scenario that reflects a prolonged period of weak demand. Notwithstanding the planned refinance, both financial projections reflect current borrowings and related terms, the Amended Covenants and net proceeds from the share placing.

Base Case

The base case includes the Board approved 2025 Budget and forecast for the four months ended April 2026 adjusted downwards to reflect trading through to the end of March 2025 and the expectation of April 2025 performance. Representing a year-on-year revenue decline of 5% in 2025, the base case is weaker than the management's target of flat year-on-year revenue. In the first four months of 2026 revenue growth rises to high single digit as a slow start to demand in 2025 is lapped.

The Base Case incorporates a modest recovery in the cine and scripted TV segment, but with activity levels that fall considerably short of the those seen in 2022. Demand for Videndum products in this segment are forecast to exhibit low single-digit growth. Whereas in the Broadcast market headwinds from a declining news sector are expected to be matched by growth in sports broadcasting such that for Videndum revenues, excluding the Olympics impact, are set to be initially flat before benefiting in the latter period of the forecast from new product introductions. For the ICC market, demand is expected to recover to low single digit growth through the assessment period. 

Base case gross margin is set to rise to c.40% for 2025, benefiting from additional volumes, improved pricing, realisation of restructuring benefits from announced initiatives and procurement savings. For the remaining four month period of the forecast period gross margin is set to fall marginally compared to the 2025 average due to seasonally lower volumes impacting operating leverage of indirect costs.

Throughout the assessment period the Group has headroom over covenants and sufficient liquidity with the lowest point being in April 2026, with steadily improving headroom thereafter. Headroom over leverage and interest cover covenants is limited following their reintroduction in December 2025.

Severe but plausible downside assessment

In this scenario, the Board has modelled a slower than expected recovery in the cine and scripted TV market combined with lower growth and weaker take-up rates for new product introductions. The net impact on forecast revenue being a reduction versus the base case of 8% in 2025 such that revenue is 13% lower than that achieved in 2024. Revenue in the first four months of 2026 growing mid-single digit including both the benefit of fulfilling Winter Olympic contracts and a subdued 2025 comparative.

The loss of operational leverage from lower volumes combined with an assumed reduced benefit from pricing and procurement savings leads to gross margin c.300bps weaker across the forecast period under the severe but plausible downside case.

The mitigations modelled in this scenario beyond the restructuring activity anticipated in the base case are limited to targeting discretionary spend that can be stopped quickly and with negligible impact on revenue in the assessment period. Cost savings would be achieved through a recruitment freeze on backfilling vacancies, and lower variable pay in line with lower financial performance. Further permanent headcount restructuring has not been considered given the time required to consult with employees and unions and the time necessary for cash benefits to exceed the cost of implementation.

Considering the above assumptions and judgements, the severe but plausible scenario foresees a series of covenant breaches. The June 2025 LTM covenant has limited headroom and the September 2025 LTM EBITDA covenant would be breached, as would the December 2025, March 2026 and June 2026 leverage and interest cover covenants. Additional liquidity would be required from January 2026 in order to meet the minimum liquidity covenant and for the period to February 2026 this additional liquidity requirement would be within the £11 million headroom between the liquidity cap and maximum borrowings under the RCF. For the period March 2026 onwards the liquidity requirement would exceed amounts committed under the RCF such the business would need to seek alternative sources of funding to meet both the minimum liquidity covenant as well as having sufficient liquidity to enable the Group to meet its liabilities as they fall due.

Material Uncertainty

Whilst there is headroom over the covenants linked to trading in the base case, the Group must, in all scenarios, complete its planned refinancing or satisfy lenders with an alternative deleveraging plan by October 2025, in order to avoid triggering an event of default under its RCF. The Board is confident based on preparations and progress to date that either a refinancing will be completed or a satisfactory de-leveraging plan will be agreed with lenders.

As a result of the financial projections, under the severe but plausible scenario, multiple breaches of the Group's covenants are forecast within 12 months from the approval of these financial statements. Furthermore, without additional sources of funding or new measures to improve the liquidity situation the business would have insufficient liquidity to operate from the first quarter of 2026.

If a covenant breach occurred, or additional liquidity beyond the liquidity cap be required, the Group would enter into negotiation with lenders as it has done in the past. However, as would be the case in any liquidity or covenant amendment request, funding to the Group could be withdrawn and additional liquidity or covenant relief not granted. 

Should the severe but plausible scenario come to pass, and absent additional management mitigating actions, it could jeopardise the ability for the Group to successfully complete its planned refinancing prior to the end of September 2025. This could potentially mean the lenders exercising their right to default the RCF in October 2025 if a satisfactory agreement could not be reached to deleverage the Group. 

In April 2025 a series of significant, additional tariffs to be applied to goods entering the United States were announced. A number of countries applied retaliatory tariff increases on the US who subsequently suspended application of some of the additional tariffs. The Group sells its market leading products throughout the world, including in the US, with components sourced from around the world, including from China. It also has US based manufacturing and assembly plants that serve countries outside of the United States and faces competition from Chinese origin products. Given the uncertain nature of the situation and not least the potential for a negative impact on the world economy from globally higher tariffs, the financial projections have not been adjusted for the latest tariff developments. Nevertheless, it is recognised by the Board that both risk and opportunity exist. 

The Board has concluded that these financial projections together with the risk of a negative tariff related outcome and the inherent difficulty in predicting the terms and timing of a refinance, or deleveraging plan should a refinance not occur, do indicate the existence of a material uncertainty which may cast significant doubt over the Group's ability to continue as going concern. The Financial Statements do not include the adjustments that would result if the Group were unable to continue as a going concern.

The results for the full year 2023 and half year 2024 also indicated the existence of a material uncertainty.

Critical accounting judgements and key sources of estimation uncertainty

The following provides information on those policies that the Directors consider critical because of the level of judgement and estimation required which often involves assumptions regarding future events which can vary from what is anticipated. The Directors review the judgements and estimates on an ongoing basis with revisions to accounting estimates recognised in the period in which the estimates are revised and in any future periods affected. The Directors believe that the consolidated financial statements reflect appropriate judgements and estimates and provide a true and fair view of the Group's performance and financial position.

Key sources of estimation uncertainty in applying the Group's accounting policies

The following are the key sources of estimation uncertainty that the Directors have made in the process of applying the Group's accounting policies and that have a significant risk of resulting in material adjustments to the carrying amounts of assets and liabilities within the next financial year.

Impairment of goodwill and acquired intangibles

The critical judgement around the impairment assessment of acquired intangibles is dependent on the internal indicator analysis. The impairment of goodwill involves making assumptions. The most critical assumptions include determination of the discount rates and terminal growth rates. All assumptions are reviewed at each reporting date. Further details about the assumptions used and sensitivities are set out in note 3.1 "Intangible assets".

The goodwill recognised by the Group has all arisen as a result of acquisitions and is stated at cost less any accumulated impairment losses. Goodwill is allocated on acquisition to cash-generating unit ("CGU"), or groups of CGUs, which are anticipated to benefit from the combination. The CGUs are assessed to be the three segments of the Group. Goodwill is not subject to amortisation but is tested for impairment annually or if there is an indicator triggering the impairment assessment. Impairment is determined by assessing the recoverable amount of the CGU to which the goodwill is allocated. This estimate of recoverable amount is determined at each assessment date. The estimate of recoverable amount requires significant assumptions to be made and is based on a number of factors such as the near-term business outlook for the segment, including both its operating profit and operating cash flow performance, Terminal growth rates beyond 2029 and discount rates applied. Where the recoverable amount of the CGU is less than the carrying amount, an impairment loss is recognised in the statement of profit or loss. All acquisitions that have occurred since 1 January 2010 are accounted for by applying the acquisition method. Goodwill on these acquisitions represents the excess of the fair value of the acquisition consideration over the fair value of the identifiable net assets acquired, all measured at the acquisition date. Subsequent adjustments to the fair values of net assets acquired can be made within 12 months of the acquisition date where original fair values were determined provisionally. These adjustments are accounted for from the date of acquisition. Further details about the assumptions used and sensitivities are set out in note 3.2 "Intangible assets".

During the year ended 31 December 2023, the impairment of acquired intangibles involved making assumptions. The most judgemental assumptions include determination of future trading performance, the weighted average cost of capital ("WACC"), growth rates, operating leverage and operating cash conversion. All assumptions are reviewed at each reporting date. At 31 December 2024, these have been considered as part of the goodwill impairment.

Inventory

Provisions are required to write down slow-moving, excess and obsolete inventory to its net realisable value. Management assessed the level of inventory provisioning by category and judgements and estimates were made in determining if a provision was required and at what level. The key estimates relate to supply chains and their lead times, future selling price, anticipated future sales of products over particular time periods, the susceptibility of the underlying product to obsolescence and current year trading performance. The anticipated level of future sales is determined primarily based on actual sales over a specified historic reference period, which has been enhanced to a period of between six and 24 months, which is determined by Management and is deemed appropriate to the type of inventory.

Pension benefits

The actuarial valuations associated with the pension schemes involve making assumptions about discount rates and life expectancy. All assumptions are reviewed at each reporting date.

Tax

The Group is subject to income taxes in a number of jurisdictions. Management is required to make estimates in determining the provisions for income taxes and deferred tax assets and liabilities recognised in the consolidated financial statements. Tax benefits are recognised to the extent that it is probable that sufficient taxable income will be available in the future against which temporary differences and unused tax losses can be utilised. The most significant estimates made are in relation to the recognition of deferred tax assets arising from carried forward tax losses. The recovery of those losses is dependent on the future profitability of Group entities based in the jurisdictions with those carried forward tax losses, most significantly in the United States.

Impairment of discontinued and previously discontinued operations

Non-current assets held of sale are measured at the lower of carrying amount and fair value less costs to sell. There was estimation and assumptions applied by management in determining the recoverable amount of these assets. See note 5 "Discontinued operations and non-current assets classified as held for sale".

Critical accounting judgements in applying the Group's accounting policies

The following are critical accounting judgements that the Group makes, apart from those involving estimations (which are dealt with above), that the Directors have made in the process of applying the Group's accounting policies and that have the most significant effect on the amounts recognised in the consolidated financial statements.

Development costs

The Group capitalises development costs which meet the criteria under IAS 38 "Intangible Assets" and discloses the amount capitalised in note 3.2 "Intangible assets". The Group makes significant judgements in the application of IAS 38, particularly in relation to its requirements regarding the technical feasibility of completing the asset and the Group's ability to sell and generate future economic benefits from the intangible asset.

Going concern assessment

There were material judgements made by the Board to determine if the Group is a going concern. These judgements are disclosed under "going concern" in Section 1 "Basis of Preparation".

Assets held for sale and discontinued operations

In 2023, the critical judgement was in relation to determining if the assets held for sale met the criteria to be classified as a discontinued operation under IFRS 5 "Non-current assets held for sale and discontinued operations", particularly if they represented either a separate major line of business or a geographical area of operations. Management had deemed that these requirements had been met. See note 5 "Discontinued operations and non-current assets classified as held for sale".

Alternative performance measures ("APMs")

In reporting financial information, the Group presents APMs which are not defined or specified under the requirements of IFRS. The Group believes that these APMs, which are not considered to be a substitute for, or superior to, IFRS measures, provide stakeholders with additional helpful information and enable an alternative comparison of performance over time. The "Glossary of Alternative Performance Measures ("APMs")" provides a comprehensive list of APMs that the Group uses, including an explanation of how they are calculated, why they are used and how they can be reconciled to an IFRS measure where relevant.

New and amended IFRS Accounting Standards that are effective for the current year

In the current year, the Group has applied a number of amendments to IFRS Accounting Standards that are mandatorily effective for an accounting period that begins on or after 1 January 2024. Their adoption has not had any material impact on the disclosures or on the amounts reported in these financial statements.

- Amendments to IAS 1: Classification of Liabilities as Current or Non-current and Non-current liabilities with covenants;

- Amendments to IAS 7 and IFRS 7: Supplier Finance Arrangements; and

- Amendments to IFRS 16: Lease liability in sale and leaseback

New standards and interpretations effective for future periods and not yet adopted

Amended standards and interpretations not yet effective are not expected to have a significant impact on the Group's consolidated financial statements.

At the date of authorisation of these financial statements, the Group has not applied any new or revised IFRS Accounting Standards that have been issued but are not yet effective. The standards applicable to the Group are shown below:

- Amendments to IAS 21: Lack of Exchangeability (effective 1 January 2025)

- IFRS 18: Presentation and disclosure in Financial Statements (effective 1 January 2027)

- IFRS 19: Subsidiaries without Public Accountability: Disclosures (effective 1 January 2027)

- Amendments to IFRS 9 and IFRS 7: Amendments to the Classification and Measurement of Financial Instruments (effective 1 January 2026)

- IFRIC update on IFRS 8 - Operating segments (No effective date)

2.1 Segment reporting

The Group has three reportable segments which are reported in a manner that is consistent with the internal reporting provided to the Chief Operating Decision Maker on a regular basis to assist in making decisions on capital allocated to each segment and to assess performance.